Meeting Affordable Energy Needs: Energy Assistance Resources for Low-Income Customers

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Meeting Affordable Energy NeedsEnergy
Assistance Resources for Low-Income Customers

• Roger D. Colton
• Fisher, Sheehan Colton
• Belmont, MA
• November 2008

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The Need for a Toolkit Approach

• When your only tool is a hammer,
• you tend to see every problem as a nail.

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Tool 1The Earned Income Tax Credit

• Countrys primary anti-poverty program.
• Refundable tax credit (cash back).
• Average refund around 2,000.
• 3-year retroactive refund application.
• Few jurisdictions cannot increased by 5.

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Earned Income Tax CreditReason to Pay Attention

• 1/3 used to pay for past-due utility bills.
• Only 50 - 80 of eligible claim.
• Potential for innovative utility/CBO role.
• Receipt at time of winter heating bills

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How Families Use the EITC
SOURCE Internal Revenue Service, EITC Outreach
Office, Atlanta (GA).
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Earned Income Tax Credit (EITC)

• Potential Utility Action Steps
• Mass utility outreach campaigns (NJ)
• Gap filler outreach campaign
• Part-time workers
• Women-workers
• Hispanic workers
• VITA campaign (Illinois--Ameritech)
• Targeted outreach
• Utility call center recorded message

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Utility/Ratepayer FundingTool 2 Rate
Affordability Programs

• Four Essential Elements
• Rate affordability assistance
• Be burden-based
• Address payment-troubles
• Recognize the paid but unaffordable bill
• Be tariff-based assistance
• Arrearage forgiveness
• Be affordability-based
• Administratively practicable
• Allow for customer contribution

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Utility/Ratepayer FundingTool 2 Rate
Affordability Programs

• Four Essential Elements
• Crisis assistance
• Be shutoff free if agreed payments made
• Recognize economic fragility
• A reasonable amount set aside.
• Energy efficiency
• Be integrated with rate affordability.
• Minimize lost opportunities program-wide.
• Minimize lost opportunities per each household.

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Tool 3End the Regulatory War on the Poor

• Eliminate late fees on low-income customers.
• Eliminate late fees on paid-up DPAs.
• Eliminate one-strike-youre-out deferred payment
  arrangement (DPA) policies.
• Eliminate barriers to entering budget billing.
• Arrrears as barrier
• Annual plan as barrier
• Application time of year as barrier
• Sharpen the trigger for issuing shutoff notices
• Dont send notices that utilities do not intend
  to follow-up on.

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Tool 4Enforce Regulatory Requirements

• Enforce consideration of ability-to-pay in
  structuring deferred payment plans for arrears.
  Ability-to-pay is not synonymous with income.
• Absolute income
• Discretionary income
• Fragility of income
• Seasonality of income (income, expenses)
• Ability to meet exigencies
• Enforce consideration of all regulatory factors
  in structuring deferred payment plans for
  arrears.
• Time arrears outstanding.
• Reason for arrears.
• Ability to pay.

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Tool 5Alternatives to Cash Security Deposits

• Agency-provided surety or guarantee of payment
• Provide letter guaranteeing payment
• Guarantee only kicks in if customer leaves
  system with bad debt.
• For new deposit demands.
• Substitute guarantee or surety for existing
  deposit.
• Use existing deposit to help pay arrears.
• Agency-generated guarantees by local
  business/houses of worship.
• Behavioral responses
• Financial literacy training
• Budget billing

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Tool 6 Utility Rate Refunds

• When utility money is not utility money.
• Supplier refunds / rate refunds appropriate.
• Federal fines (e.g., natural gas unauthorized use
  charges) are akin to refunds.
• Refunds can come years after-the-fact.
• LI mobility is 35 2 - 2.5x total population.
• Refunds returned to other than those who paid.
• Refunds do not belong to current customers.
• Concept of cy pres is established concept.
• Kansas ad valorem tax refund/Colorado rate
  refunds.

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Tool 7 Replicate and expand Indianas
Refrigerator Replacement Program

• Existing Duke/INCAA program
• Section 8 rental housing
• Energy efficiency utility allowance
• Low-income multi-family rental housing
• Previously constructed LIHTC/HOME properties
• First time home buyers

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Tool 8Bigger than LIHEAP PHA Utility
Allowances

• Tenant-paid utilities
• Public housing
• Assisted housing
• Covers
• Electricity
• Heating/Cooling
• Water/Sewer
• Reason to pay attention
• Covers (theoretically) 100 of bill
• Year-round -- not seasonal
• Regular update (if enforced)
• Public housing tenants lt50 FPL

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PHA Utility AllowancesWhat Needs to be Done

• Review utility allowances to ensure annual
  update.
• Provide notice to PHAs whenever rates change by
  10 or more.
• Review whether utility allowance pays for cooling

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Tool 9The Excess Shelter Deduction

• Food Stamp eligibility based on countable
  income.
• Shelter expenses above 50 an income deduction.
• Shelter rent/mortgage utilities (include
  telephone)
• Actual shelter costs/Standard Utility Allowance
  (SUA)

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Excess Shelter DeductionReason to Pay Attention

• If household income is lowered
• Some qualify for Food Stamps when they otherwise
  would not
• Some qualify for more Food Stamps
• Every 3 reduction in income yields 2 in
  benefits.
• Implications for spike in fuel prices!
• 30 - 40 a month in increased Food Stamps
• Customers indifferent as to source of dollars.
• Dollar for dollar passthrough to feds
• Disabled and elderly have no cap on income
  disregard.

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Food Stamps Standard Utility AllowanceWhat
needs to be done

• Annual Review
• Take increased energy prices into account.
• Regular annual update
• Not simply CPI-U but CPI-U for particular fuels.
• Take water and wastewater into account
• Take all components of telephone bills into
  account.

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For more information

• http//www.fsconline.com
• News
• Library

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For more information

• roger_at_fsconline.com

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Unaffordable energy in Indiana

• Appendix
• 30 things to do. . .today

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The Parable of the Olive Trees

• Once upon a time, a mansion owner called his
  gardener in and asked him to plant 100 olive
  trees. The gardener was aghast. But sir, the
  gardener said, those trees will not bear fruit
  for 50 years. Nodding in agreement, the mansion
  owner responded Yes. That is why I would like
  you to plant them today.

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What do we do?Toolkit 1 Promote available
public assistance

• Promote the Earned Income Tax Credit
• Promote participation in Summer Food Service
  programs.
• Adopt automatic enrollment for FCC Lifeline.

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What do we do?Toolkit 2 Enforce existing laws
regarding assistance

• Enforce PHA utility allowance statutory mandates.
• Enforce annual update to Food Stamp Standard
  Utility Allowance (SUA)
• Screen for claims for Food Stamp Excess Shelter
  Deductions.

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What do we do?Toolkit 3 Eliminate wasteful
energy usage

• Require energy efficient construction in
  publicly-funded new construction/rehab.
• Home Investment Partnership funding (Consolidated
  Plan)
• Community Development Block Grant (Consolidated
  Plan)
• Low-Income Housing Tax Credit (Qualified
  Allocation Plan)
• Insert Energy Star mandate into all
  publicly-issued housing procurements.
• Target percentage of utility-based residential
  energy efficiency investments equal to percentage
  of low-income households.
• Adopt special energy efficient utility
  allowances for Section 8 housing meeting Energy
  Star standards as incentive for owners to upgrade
  their properties.
• Provide technical assistance to promote ESCOs in
  PHAs/large landlords.

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What do we do?Toolkit 4 End the regulatory
war on the poor

• Eliminate late fees on low-income customers.
• Eliminate late fees on paid-up DPAs.
• Eliminate one-strike-youre-out deferred payment
  arrangement (DPA) policies.
• Eliminate barriers to entering budget billing.
• Offer non-annual budget billing plans.
• Sharpen the trigger for issuing shutoff notices
• Dont send notices that utilities do not intend
  to follow-up on.

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What do we do?Toolkit 5 Enforce regulatory
consumer protection requirements.

• Enforce consideration of ability-to-pay in
  structuring deferred payment plans for arrears.
• Absolute income
• Discretionary income
• Fragility of income
• Seasonality of income (income, expenses)
• Ability to meet exigencies
• Enforce consideration of all regulatory factors
  in structuring deferred payment plans for
  arrears.
• Time arrears outstanding.
• Reason for arrears.
• Ability to pay.

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What do we do?Toolkit 6 Create needed rate
affordability programs

• Create a System Benefits Charge (SBC) fund
• Rate affordability (NJ, PA, OH)
• Arrearage forgiveness
• Energy efficiency
• Crisis funding
• Create alternative fuel fund contribution
  structures.
• Utility vendors/suppliers.
• Donations of rate refunds/rebates.
• Enrollment in ongoing donation plan.
• Donation of capital credits/patronage dividends.

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What do we do?Toolkit 7 Creatively seek new
funding.

• Accept alternatives to cash security deposits.
• Financial alternatives (e.g., guarantees)
• Behavior alternatives (e.g., budget billing,
  financial literacy training)
• Replace cash deposits with guarantees
• Use cash deposit as financial resource to pay
  bills.
• Seek state legislation on escheated rate
  refunds/utility deposits/patronage dividends.
• Adopt low-income set-aside of rate refunds.
• Commit utility refunds to arrearage forgiveness
  (pipeline refunds, excess usage charges, etc.).
• Use direct load control technology as means of
  delivering low-income assistance.

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What do we do?Toolkit 8 Address the needs of
bulk fuel users.

• Seek state consumer protection rules regarding
  winter bulk fuel fill-ups
• Require offer of partial fill-ups.
• Allow budget billing.
• Apply for state Propane Education and Research
  Council (PERC) funds for low-income conservation
  education.
• Promote summer fill-up propane programs.